December 8, 2019

Uncertainty at Fed Over Its Stimulus Plans and Its Leadership

President Obama suggested late Monday that he was likely to nominate a new Fed chairman this year, saying that Mr. Bernanke had “already stayed a lot longer than he wanted or he was supposed to.” Mr. Obama added that Mr. Bernanke, whose second four-year term in office ends in January, has done an “outstanding job.”

The comments bounced around Washington on Tuesday even as Mr. Bernanke convened a regularly scheduled meeting of the Fed’s policy-making committee to debate how much longer the Fed will continue its current efforts to stimulate the economy. The Fed is not expected to announce any immediate changes on Wednesday, at the close of the meeting, but investors are watching for signs that the Fed is considering scaling back later this year.

The central bank is buying $85 billion a month in mortgage-backed securities and Treasury securities, in addition to holding short-term interest rates near zero. Both measures are intended to encourage job creation by easing financial conditions, and the Fed pledged to press the campaign until it saw “sustained improvement” in the outlook for the labor market.

But that message has been muddled recently by conflicting pronouncements about the duration of the asset purchases from several of the 19 Fed officials who help make policy. Mr. Bernanke contributed to the confusion by telling Congress last month that the Fed might begin to reduce the pace of its purchases this year — but might not — while avoiding any clear account of how the central bank would make such a decision.

Uncertainty about the Fed’s plans and its leadership has focused attention on the news conference that Mr. Bernanke plans to hold on Wednesday afternoon after the Federal Open Market Committee releases a policy statement. The Fed also will release economic projections by the 19 officials, which could help to explain the apparent momentum toward doing less by showing how quickly they expect the economy to grow and unemployment to decline.

“Federal Reserve officials believe that clear communication about policy intentions can help manage market expectations and so increase the effectiveness of monetary policy,” Kevin Logan, chief United States economist at HSBC, wrote to clients on Monday. “Lately, however, the policy makers appear to have muddled the message and so have created confusion rather than clarity on the policy outlook.” The news conference, he said, is a chance “to clarify.”

The confusion is costly. A recent survey of the 21 companies authorized to trade securities with the Federal Reserve Bank of New York, a list that includes most of the nation’s largest financial companies, found widespread agreement that uncertainty about the Fed’s plans was effectively tightening financial conditions. Interest rates on 10-year Treasuries, a benchmark for the Fed’s efforts to reduce borrowing costs, rose to 2.20 percent on Tuesday from a low of 1.66 percent at the start of May.

Some analysts argue that the Fed still intends to press ahead with asset purchases at least through the end of the year. They note that Mr. Bernanke has allowed dissenters to command the public stage even as they exercise relatively little influence over the course of Fed policy. Some also see the cacophony as an intentional damper on the ebullience of investors, carving out time for the benefits of low interest rates to spread through the economy.

The unemployment rate has fallen only slightly since the Fed began its latest round of bond buying, to 7.6 percent in May from 7.8 percent in September. And even that decline happened mostly because people stopped looking for work. The share of American adults with jobs has not increased in three years. The Fed’s preferred measure of inflation has sagged to 1.05 percent, the lowest level in more than 50 years and markedly below the 2 percent annual pace the Fed considers healthy.

“In our view it would be risky to deliver a hawkish monetary policy message at a time when growth remains sluggish, inflation continues to trend down and market inflation expectations are dropping sharply,” Goldman Sachs economists wrote in a note to clients last week.

Other analysts, however, see mounting evidence that Mr. Bernanke and his allies would like to buy fewer bonds, although most still do not expect the Fed to reduce the pace of its asset purchases before September at the earliest. Fed officials have described the asset purchases as an experiment with uncertain consequences, particularly the potential disruption of financial markets, and warned that those risks might increase with the size of the Fed’s holdings.

While the pace of growth has increased only modestly, the worst-case possibility, in which mismanaged fiscal policy sends the economy sliding back into recession, has faded. “The asset purchases may have been simply insurance against a fiscal disaster that did not materialize,” wrote Tim Duy, an economist at the University of Oregon.

Moreover, some Fed officials have concluded that large job gains are beyond reach. Economists at the Federal Reserve Bank of Cleveland wrote recently that the Fed should be satisfied if the economy adds 150,000 jobs a month — well below the monthly average of 176,000 so far this year. Economists at the Federal Reserve Bank of Chicago set the bar even lower, at 80,000 jobs a month. Both estimates are based on the assumption that many of the people who stopped looking for work in recent years will never return, allowing the unemployment rate to return closer to its normal levels during an economic expansion even without a rebound in employment.

Some of these decisions will most likely be made after Mr. Bernanke leaves office. Mr. Obama, in an interview with the journalist Charlie Rose on PBS, avoided answering a direct question about reappointing Mr. Bernanke. He said instead that Mr. Bernanke “has been an outstanding partner along with the White House, in helping us recover much stronger than, for example, our European partners, from what could have been an economic crisis of epic proportions.”

The interview, taken together with earlier comments by Mr. Bernanke, reinforces a growing expectation that the administration plans to nominate a new Fed chairman this year. The position requires Senate confirmation. Only three people have held the Fed chairmanship in the last 30 years, and the Obama administration has an opportunity to put a Democrat atop the central bank for the first time since the resignation of Paul Volcker in the late 1980s.

Janet L. Yellen, the Fed’s vice chairwoman, is widely regarded as a leading candidate. She would become the first woman to head the Fed or any other major central bank. Other possible candidates include Timothy F. Geithner and Lawrence H. Summers, both former Obama advisers, and Roger W. Ferguson Jr., a former Fed vice chairman.

Article source: http://www.nytimes.com/2013/06/19/business/economy/uncertainty-at-fed-over-its-stimulus-plans-and-its-leadership.html?partner=rss&emc=rss

DealBook: Morgan Stanley Shares Fall After Profit Report

The headquarters of Morgan Stanley in New York.Stan Honda/Agence France-Presse — Getty ImagesThe headquarters of Morgan Stanley in Manhattan.

1:22 p.m. | Updated

Shares of Morgan Stanley were down more than 4.5 percent in afternoon trading on Thursday as investors appeared to be unimpressed with the firm’s latest results.

The first-quarter adjusted earnings exceeded analyst estimates. And the financials had some bright spots, notably strong results in the bank’s wealth management division. But the institutional securities division, which includes trading, logged a fall in revenue over year-ago levels, rattling some investors.

Roger A. Freeman, an analyst with Barclays, called Morgan Stanley’s results “a mixed bag.”

Including charges, the firm posted a profit of $1 billion, or 50 cents a share. That compares with a loss of $79 million in the period a year earlier. The results, however, were affected by one-time accounting charges related to the firm’s credit spreads.

Excluding those charges, the firm had a profit of $1.2 billion, or 61 cents a share, a decline from the $1.4 billion reported in the first quarter of 2012. The results topped the estimate of 57 cents a share among analysts polled by Thomson Reuters.

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Morgan Stanley’s adjusted revenue for the three months ended March 31 fell to $8.5 billion from $8.9 billion in the period a year earlier. Analysts had been forecasting revenue of $8.35 billion.

“Morgan Stanley demonstrated solid momentum across the firm this quarter, consistent with the strategic objectives we laid out at the beginning of the year,” the bank’s chief executive, James P. Gorman, said in a statement.

It was a tricky quarter for banks across Wall Street, and most firms posted decent but not eye-popping results. This was clearly the case with Morgan Stanley. The firm posted strong results in wealth and asset management, but institutional securities – its third major division, which includes fixed income and banking – experienced a revenue drop.

The wealth management unit, which has been a big focus for the firm since the financial crisis, has pushed into less-risky lines of business. The division, led by Gregory J. Fleming, posted pretax income from continuing operations of $597 million, up 48 percent from the $403 million reported in the first quarter of last year.

One number investors had been watching – the division’s pretax profit margin – came in at 17 percent, higher than some analysts had projected. Net revenue in wealth management rose to $3.5 billion from $3.3 billion in the first quarter of 2012.

Asset management results were also strong. The unit posted revenue of $645 million in the first quarter, 21 percent higher than in the period a year earlier.

The bank has been working to cut back its fixed income operation, in part because that is where much of the firm’s risk is embedded. Since the financial crisis, some banks have been looking to downsize this business segment and shed risk.

Excluding charges related to the firm’s credit spreads, known as debt valuation adjustment, or DVA, net revenue in institutional securities was $4.4 billion, compared with $5.1 billion in the period a year earlier. Investment banking revenue, however, climbed 15 percent in the quarter, to $1.2 billion.

While the firm’s debt and equity underwriting desks posted yearly revenue gains, most other departments did not fare as well. For instance, revenue from trading commodities and rates fell in the quarter. This decline in revenue from rates trading came despite a decision to take more risk over the last year. In rates and credit spreads, the firm’s quarterly value at risk – a yardstick of how much could be lost in one trading day – was $61 million, up from $46 million in the year-ago period.

Morgan Stanley has been aggressively cutting costs over the last year, and its worldwide work force shrunk by 7 percent, to 55,289.

Return on equity, a measure of how efficiently shareholder money is being deployed, fell to 7.6 percent from 9.2 percent in the year-ago period.

Article source: http://dealbook.nytimes.com/2013/04/18/morgan-stanley-swings-to-a-profit-beating-estimates/?partner=rss&emc=rss

DealBook: Morgan Stanley Shares Fall as Investors Appear Unimpressed With Profit Report

The headquarters of Morgan Stanley in New York.Stan Honda/Agence France-Presse — Getty ImagesThe headquarters of Morgan Stanley in Manhattan.

11:32 a.m. | Updated

Shares of Morgan Stanley were down more than 3 percent in late morning trading on Thursday as investors appeared to be unimpressed with the firm’s latest results.

The first-quarter adjusted earnings exceeded analyst estimates. And the financials had some bright spots, notably strong results in the bank’s wealth management division. But the institutional securities division, which includes trading, logged a fall in revenue over year-ago levels, rattling some investors.

Roger A. Freeman, an analyst with Barclays, called Morgan Stanley’s results “a mixed bag.”

Including charges, the firm posted a profit of $1 billion, or 50 cents a share. That compares with a loss of $79 million in the period a year earlier. The results, however, were affected by one-time accounting charges related to the firm’s credit spreads.

Excluding those charges, the firm had a profit of $1.2 billion, or 61 cents a share, a decline from the $1.4 billion reported in the first quarter of 2012. The results topped the estimate of 57 cents a share among analysts polled by Thomson Reuters.

Related Links



Morgan Stanley’s adjusted revenue for the three months ended March 31 fell to $8.5 billion from $8.9 billion in the period a year earlier. Analysts had been forecasting revenue of $8.35 billion.

“Morgan Stanley demonstrated solid momentum across the firm this quarter, consistent with the strategic objectives we laid out at the beginning of the year,” the bank’s chief executive, James P. Gorman, said in a statement.

It was a tricky quarter for banks across Wall Street, and most firms posted decent but not eye-popping results. This was clearly the case with Morgan Stanley. The firm posted strong results in wealth and asset management, but institutional securities – its third major division, which includes fixed income and banking – experienced a revenue drop.

The wealth management unit, which has been a big focus for the firm since the financial crisis, has pushed into less-risky lines of business. The division, led by Gregory J. Fleming, posted pretax income from continuing operations of $597 million, up 48 percent from the $403 million reported in the first quarter of last year.

One number investors had been watching – the division’s pretax profit margin – came in at 17 percent, higher than some analysts had projected. Net revenue in wealth management rose to $3.5 billion from $3.3 billion in the first quarter of 2012.

Asset management results were also strong. The unit posted revenue of $645 million in the first quarter, 21 percent higher than in the period a year earlier.

The bank has been working to cut back its fixed income operation, in part because that is where much of the firm’s risk is embedded. Since the financial crisis, some banks have been looking to downsize this business segment and shed risk.

Excluding charges related to the firm’s credit spreads, known as debt valuation adjustment, or DVA, net revenue in institutional securities was $4.4 billion, compared with $5.1 billion in the period a year earlier. Investment banking revenue, however, climbed 15 percent in the quarter, to $1.2 billion.

While the firm’s debt and equity underwriting desks posted yearly revenue gains, most other departments did not fare as well. For instance, revenue from trading commodities and rates fell in the quarter. This decline in revenue from rates trading came despite a decision to take more risk over the last year. In rates and credit spreads, the firm’s quarterly value at risk – a yardstick of how much could be lost in one trading day – was $61 million, up from $46 million in the year-ago period.

Morgan Stanley has been aggressively cutting costs over the last year, and its worldwide work force shrunk by 7 percent, to 55,289.

Return on equity, a measure of how efficiently shareholder money is being deployed, fell to 7.6 percent from 9.2 percent in the year-ago period.

Article source: http://dealbook.nytimes.com/2013/04/18/morgan-stanley-swings-to-a-profit-beating-estimates/?partner=rss&emc=rss

Media Decoder: Blackout Is a Boon for Super Bowl Ratings

A timely blackout that provided both a diversion and a change in momentum for what looked like a one-sided game helped CBS to record the third most-watched event in television history for Super Bowl XLVII.

The game between the Baltimore Ravens and the San Francisco 49ers attracted an average audience of 108.4 million viewers. That was down slightly from the 111.3 million who watched the game last February, and the 111 million from the previous year.

Initial ratings from the country’s biggest cities seemed to point to an even larger audience than last year, but the final national numbers indicated there may have been slightly less interest in this matchup than in New York vs. New England last year.

One thing that did seem to help was the power failure, which occurred 90 seconds into the second half and knocked out the lights on one side of the stadium. With the game looking like a rout — Baltimore had just scored to go ahead 28-6 – the possibility loomed that a significant number of viewers would tune out. But the blackout stirred a torrent of comment on social media, and the break in the action may have led to a change in momentum as the 49ers staged a furious rally that produced a close and thrilling finish.

Certainly the interest in the game did not flag because of the blackout. The last 17 minutes of the game were the most viewed, with a total of 113.9 million viewers.

Before the game, there had been predictions that this year’s contest might see a decline in viewers for the first time in years. The conference playoff games this season were down significantly from last season, with the prime-time A.F.C. game dropping by about 10 million viewers compared with the N.F.C. game in prime time last season.

With a one-sided game, the same level of drop-off might have been possible. Instead CBS was able to maintain about 97 percent of last year’s record-setting audience.

The delayed finish of the game also meant that virtually all of the action fell into the prime-time hours — which likely enhanced the ratings somewhat. On the other hand, it meant that the entertainment show CBS had scheduled to follow the game, its new drama “Elementary,” fell entirely out of prime time in the East and Central time zones.

So its ratings won’t even count on CBS’s prime-time record. “Elementary” did manage to attract 20.8 million viewers, despite its late start. That was not the worst performance in recent years for a show placed behind the Super Bowl. Since 1992, that honor still belongs to an episode of “Alias” on ABC in 2003, which was also delayed past 11 p.m. in the East and drew only 17.3 million viewers.

But “Elementary” did score the worst post-Super Bowl ratings since 1992 for the groups that advertisers most seek to reach, viewers between the ages of 18 and 49 and 25 and 54. Its numbers there were still good by any current standard, however, with a 7.8 and an 8.3 rating, respectively.

Those numbers were down considerably from last season when NBC ran the premiere of a new season of “The Voice” and scored a 16.3 and a 16.4 rating in those two audience groups, with a total audience of 37.6 million viewers.

Article source: http://mediadecoder.blogs.nytimes.com/2013/02/04/blackout-is-a-boon-for-super-bowl-ratings/?partner=rss&emc=rss

Chinese Manufacturing Data Suggests Muted Recovery

HONG KONG — A survey of manufacturing activity in China on Thursday provided more reassurance that the Chinese economy, buoyed by somewhat improved global trade and a string of government stimulus measures last year, has settled into a muted recovery.

The reading of the purchasing managers’ index, published by the British bank HSBC, rose to 51.9 in January from 51.5 in December. It was the fifth consecutive improvement in the monthly index, and took the number to its highest level in two years.

The early version of the HSBC index, which is based on about 90 percent of the survey results, provides one of the earliest insights into the world’s second-largest economy each month, and is thus closely watched by analysts and investors.

“The upbeat manufacturing PMI reading heralds a good start to China’s economic growth into the New Year,” commented Qu Hongbin, chief China economist for HSBC, in a note accompanying the data release. While export growth was likely to remain tepid, he added, infrastructure construction was regaining momentum, and companies had started to step up hiring and manufacturing again.

The reading underlined a picture that has been crystallizing since last year: That the years of double-digit growth are a thing of the past, and that China’s economy has, for now, settled into a more modest pace of expansion.

Data released last week showed that the Chinese economy expanded just 7.8 percent last year — from 9.3 percent in 2011 and 10.4 percent in 2010.

The last few months have shown an improvement as government-mandated measures aimed at propping up growth filtered through to the economy.

But that recovery has been modest. The January HSBC index released Thursday, for example, was just 4.3 points higher than its last trough in August, Mr. Qu noted. By comparison, the rebound of 2009 saw the index jump more than 9 points in just five months.

End

Article source: http://www.nytimes.com/2013/01/25/business/global/chinese-manufacturing-data-suggest-muted-recovery.html?partner=rss&emc=rss

Research in Motion Stock Hits Eight-Year Low

OTTAWA — Shares in Research in Motion fell 11 percent Friday after the company’s announcement that it would delay a new series of BlackBerry phones that it hopes will revitalize its brand.

It was the lowest level RIM’s stock had reached in about eight years. The stock ended the day at $13.44, or down $1.69.

The company said late Thursday that the BlackBerry 10 phones, which had been expected to appear early in 2012, will not appear in stores until the end of the year because of a component delay. Several analysts suggested that the company’s future might be in jeopardy because shoppers and software developers might not care about BlackBerry by then.

Kris Thompson of National Bank Financial titled his research note “Likely Game Over,” and Mike Abramsky of RBC Capital Markets cut his target price for RIM to $16 from $20. He said in his note that delay would make RIM “significantly late to the high-end smartphone market, risking further share losses and competitive developer momentum.”

During a conference call Thursday, Mike Lazaridis and Jim Balsillie, the Canadian company’s co-chief executives, said that until the new phones arrived, they would focus on current BlackBerry models through increased advertising and other promotions.

Canalys, a market research firm, said that RIM’s share of the smartphone market in the United States fell to 9 percent in the last quarter. In 2006, before the iPhone and Android phones were available, RIM commanded just under 60 percent of the market.

Tim Long, an analyst with BMO Capital Markets, predicted that efforts to push the current phones in the United States “will not work and will be a big hit to earnings.” He lowered his rating for RIM to market perform, from outperform.

“While we clearly waited too long to downgrade, we are more concerned that management’s new strategic moves will likely destroy even more value,” Mr. Long wrote.

Like some dissident RIM investors, Mr. Long suggested that the company should consider changing its senior management.

The delay in the new phone models was announced in a conference call for the company’s third-quarter results on Thursday. Net income fell 71 percent, to $265 million, from the same time period last year, while revenue was $5.2 billion, a 6 percent drop.

Article source: http://www.nytimes.com/2011/12/17/technology/rim-stock-hits-eight-year-low.html?partner=rss&emc=rss

Service Sector Expands, Slowly, for a 16th Month

WASHINGTON (AP) — The nation’s service sector expanded in March for the 16th consecutive month, although growth slowed from the previous month’s rate, which was the fastest in more than five years.

The Institute for Supply Management, a private trade group, said on Tuesday that its index of service sector activity dropped to 57.3 last month, from 59.7 in February.

It was the first decline in seven months. Still, any reading above 50 indicates expansion.

The index fell to 37.6 in November 2008, at the height of the financial crisis.

“The report shows a few scattered signs of slowing momentum, but not enough to disrupt the overall picture of continued growth,” said Ryan Wang, an economist at HSBC Securities, about the service index.

Article source: http://feeds.nytimes.com/click.phdo?i=3c2b45cef4a3894c88ad318b576939a9